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The noble Lord said: My Lords, at the outset let me thank all noble Lords who are to take part in this debate this evening, as I shall not have an opportunity to do so at the end. Also, I thank the Minister in advance for his reply, which I am sure will be both informative and sympathetic.
The tourist industry generates expenditure of £53 million a year and accounts for some 5 per cent of our gross domestic product. It is our largest invisible export and provides employment for 1.75 million people. In an era of declining manpower needs, both in manufacturing and agriculture, it is tourism, especially in rural areas, which has been the greatest provider of alternative employment. The industry depends on an infrastructure of a range of accommodation to cater for all tastes and pockets.
One specific sector with which I am closely involved caters for touring caravans. My involvement is that I am both a practitioner and a member of the Caravan Club. I am also a member of the council of that club, which is the largest user group of touring caravans in the United Kingdom and probably in the world. As such the club owns and operates the largest network of sites--203 of them--for touring caravans in this country. Operating a site network is a manpower intensive business. Indeed, for the club's network it is necessary to employ a total of 640 people on a variety of contracts to meet all needs throughout the season for warden service.
The usage of sites is a succession of unpredictable peaks and troughs because touring caravanners enjoy the ability to react flexibly to short-notice, to changes in the weather and the occurrence of events and sporting fixtures among other things, for which they will use their caravans as a base. Therefore sites are manned to cover all possible peaks, including the likelihood of people travelling through the night and arriving at all hours. This element includes the important group of caravanners who are incoming tourists from overseas. They arrive by ferry, often in the middle of the night and then drive to a site relatively close to the ferry port where they will start their holiday.
The warden workforce, prior to 1999, was happy to live in their caravans, on their sites, throughout the season, being available to members when required, including for emergencies during the night and taking their own free time when slack periods happened to occur. However, with the imposition of the Working Time Directive, that approach is no longer possible. The club is required to prescribe working hours to the wardens to ensure that the maximum is not exceeded over the reference period allowed. While it is true that some individuals might opt out of the working time directive, that cannot be relied upon and contracts have to be drawn up that recognise that all wardens have
The matter cannot be divorced from the associated legislation to impose a national minimum wage. Wardens might be prepared to forego their rights under the Working Time Directive, but none can opt out of the minimum wage. And of course, stipulating the minimum at which the least onerous job must be paid forces up the rate at which those with greater experience and those with greater responsibility must be paid.
The Caravan Club has found that if it was to provide in 1999 the same level of service at its sites as in 1998, it would involve employing more people to cover the hours and paying many of them at higher rates. The result would have been a 60 per cent increase in the wardens' salary bill alone. That was unacceptable, so a compromise solution has been adopted whereby the level of service on sites has been degraded by ordering wardens to institute practices which mean that no service of any sort is available at certain times. Even so the salary bill has increased by 30 per cent--£600,000 a year. That increase has not been passed on in increased site fees in 1999 and so the site network will run at a loss. Clearly, that must be rectified for future years and the club will be providing a lower quality service at greater cost. That is not a recipe for success in a service industry such as tourism.
The customers of the tourist industry who sustain economies of so many rural areas use discretionary money. The facts of life in 1999 are that people have less money to spend at their own discretion, especially those likely to come to the UK from overseas. My noble friend Lady Anerley of St. Johns, in a debate on 12th May last, made reference to the British Activity Holiday Association, which also has resident staff, but as part of its community. There are many such organisations. I wonder whether the Government realise how many problems are being caused to these bodies in trying to cope with the introduction of this directive.
The industry is having to deal with other directives, such as parental leave, part-time workers and works councils. To those in due course will be added the minimum wage regulations, the provisions of the Employment Relations Bill and, in the case of the hospitality industry--an important part of tourism-- the impending Food Standards Bill. The regulations are seen by many in the hospitality industry as unhelpful and expensive to implement. Far from providing protection in employment, which seems to have been the Government's reason for their introduction, the result has been bureaucratic complication and expense. Remember the previous government negotiated an opt-out, so this is not something imposed on us by Brussels.
The British Hospitality Association has seen fit to offer its members--300,000 establishments--a 60-page pack to help them through the implementation of the directive. Perhaps the Minister would like to comment on the user-friendliness of it all.
To what extent will the devolved administrations in Wales, Scotland and Northern Ireland be able to assist those members of the tourist industry in their areas, bearing in mind that they are taking up many of the regional functions of the English Tourist Board?
All of this is in stark contrast with the practice abroad where tourism, despite the adoption of additional working and wage regulation, seems to be much better protected from the worst aspects of such directives by the various agencies set up by the other member states.
The directive seems to pile complicated problems on to possibly fragile businesses that they could well do without. That view was confirmed in an article in the Daily Telegraph business section on 10th June which highlighted the widespread ignorance of what the directive is about; the need for both employers and employees to keep better records and look forward to increased litigation in the future. That is hardly an exciting prospect for future industrial relations.
This centrally driven burden of unnecessary regulations is being imposed on the tourist industry to its detriment. Prescribing working hours contractually to ensure that maxima are not exceeded and wage bills are contained, in an industry where peaks and troughs of activity cannot be forecast, is not a sensible management practice. The working time directive, associated with the national minimum wage, is inimicable to the best interests of the tourist industry and certainly to the sector in which I am involved.
Lord Haskel: My Lords, on the bicentenary of the French Revolution I happened to be on business in Beijing. At a reception, a very senior Chinese official was asked what had been the effect on China of the French Revolution. He thought for a few moments, and then he said: "I think it is too early to say."
I think it is too early say what the effect of the Working Time Directive has been on tourism. I do not think that in one season its intricacies and flexibilities have been fully understood or experienced by British business. However, I am grateful to the noble Lord, Lord Cadman, for providing me with this opportunity to say something about the tourism industry.
I live in Richmond, Surrey, and my local FE college, Richmond College, is one of our leading establishments for training people for the tourism industry. It seems that there are two parts to the industry: the hospitality side and the travel and tourism side. The head of the department, Mr Alan Crossthwaite, tells me that there are plenty of people who want to join the travel and tourism course, but that it is a struggle to find people for the hospitality and catering courses.
He explains this as a matter of image. Travel and tourism has an exciting and progressive image, whereas hospitality seems to be a poor relation. The hospitality sector has an image of working long hours, with a reputation for low starting pay and the lack of a proper career structure. But this is changing with more and more companies introducing straight shift work into the kitchen and hotel so that people can work regular 40 to
New hotels are opening all the time and the tourism industry is expanding. There are no problems in placing qualified students; indeed, the opposite is the case. Some are tempted to take up full-time work before they are qualified because there is such a demand for their skills.
It is becoming a more skilled industry. There are important skills to be learned in hospitality and service, skills to enable the industry to increase productivity. Things do not stand still. With these additional regulations comes the new technology, the new equipment and ways of increasing people's productivity. People in every industry are having to adapt in this way; that is what competitiveness is all about.
As it becomes a more skilled industry, so the old practices become more outdated. Surely, tipping is one of these outdated practices? The tipping system must deter some recruits. Apart from here and the United States, most countries seem to have got rid of tipping, and in my view quite rightly. As the industry becomes more skilled, so people's pay should become less dependent on the idiosyncrasies of tipping. I think it is demeaning that a skilled person should have to depend on tips.
Therefore, I do not think that the problem is the Working Time Directive. If I may say so, it may just be a little bit of anti-European prejudice. The problems for the industry date from well before the introduction of the Working Time Directive. Instead of blaming the directive, has the noble Lord considered how tourism can benefit from the New Deal? How effective has the industry been in persuading personal advisers and employment service staff working with New Dealers that there are interesting, exciting and rewarding possibilities for work in the tourism and hospitality industry?
All industries are competing to attract young people. They have to make themselves attractive to young people in schools and colleges. They have to offer reasonable starting pay and good career prospects. The hospitality and tourism industry has to make itself attractive to those who like working with people or who are keen on developing their social skills. Schools should also emphasise these features and the fact that hospitality can be as exciting and as varied as travel and tourism or any other industry.
The noble Lord, Lord Cadman, told us how important the tourism industry is, and he is right; it is important to the nation's economy that it should be successful. However, I say to the noble Lord that the problem is not the Working Time Directive; the industry should look to the way it is organised so that it can then solve its own problems by making itself much more attractive and competitive and offering better prospects to today's young people.
With the ongoing agricultural crisis and with no obvious sign of improvement, the noble Lord, Lord Cadman, highlighted how the tourist industry is becoming increasingly more vital to rural areas in the United Kingdom.
The working time directive is in principle, like the minimum wage, not a bad thing. I support any legislation that will help to protect exploited workers. However, this directive has, I believe, been badly handled by both recent governments. There was initially plenty of time for the last government to sensibly prepare for this directive to be implemented. It could have been properly discussed and all businesses could have planned for its implementation. The approaching general election gave the prospective Labour Government the opportunity to play the manifesto card yet again, promising to implement the minimum wage and the Working Time Directive as soon as possible.
The directive was implemented at very great speed, with plenty of good intentions, but sadly with not enough attention to detail. It was originally put before Parliament on 30th July and was due to be implemented after the recess at the beginning of October.
The directive can be easily implemented by tourist enterprises that are open for the majority of the year because they operate in similar ways to standard businesses. The enterprises that are particularly affected are small tourist businesses which rely on seasonal help and which are open only for a short time of the year but for more than the 13 weeks at which the entitlement to holiday pay cuts in. Because these enterprises are only seasonal, there is plenty of time for workers to take holiday when required. The directive is designed to protect the rights of full-time workers to ensure that they are able to take their full entitlement to holiday in a full year.
The record-keeping that is now required, followed by the calculating and paying of holiday entitlement, will create an extra burden for many, often niche, enterprises, as well as increasing their overheads through extra administration costs, the result of which can only lead to less profitability and consequently put pressure on the viability of the smaller enterprise. For example, this year a seasonal enterprise open for approximately six months is likely to have its overheads increased by approximately 6 per cent, in a season which is already showing every indication of being worse even than last year.
As we are rapidly approaching the end of the first year of the effectiveness of this directive, can the Minister give an assurance that the Government will review the working time directive in the light of the effects on particularly small rural tourist enterprises?
Viscount Montgomery of Alamein: My Lords, both the noble Earl, Lord Stair, and my noble friend Lord Cadman spoke with authority about an industry with which they are directly involved. I approach this from a slightly different angle--with a non-pecuniary interest--in that I am the honorary patron of the Restaurant Association. The noble Lord, Lord McIntosh, will remember that I have spoken about this industry on a number of occasions and he has always been extremely helpful.
The restaurant business is a very large one; indeed, there are something like 100,000 establishments now in this country, of which more than 90 per cent--about 93,000--are businesses which employ fewer than 10 people. So they are essentially very small businesses. Interestingly enough, within those small businesses there is a huge number of part-time workers. The 1998 Labour Force Survey revealed that 60 per cent of restaurant employees work part time. It is a service industry and such small industries, as the noble Lord, Lord Haskel, said, can easily become overburdened with legislation, of which there has been a large amount lately. They also become burdened with bureaucracy which they find difficult to deal with.
As these impositions come forth from government, they impose a burden on the industry and reduce its flexibility. Essentially, service industries have to be intensely flexible. If employers in the restaurant trade are required to extend benefits, incentives, health schemes, and so on, to part-time employees, they will find it very difficult and may well decide that they have to reduce employment; and that would have exactly the reverse effect of what the Government are trying to achieve.
The noble Lord, Lord Haskel, referred to skills. He is quite right to say that the college to which he referred has done a great job in introducing people into an important industry and training them for careers. He is equally right to talk about tipping, although that is a slightly different issue and one which I have brought before the House on various occasions. I did so particularly during the time of the previous government, but we were not able to make any progress on the subject. So that is another issue to which we need to return on another occasion. The fact is that skill shortages do exist in this industry. If greater burdens are placed on the industry and if those burdens become more complicated, it will be very difficult for progress to be made.
I know that the noble Lord, Lord McIntosh, is well aware of the fact that this is an industry in which there are huge employment opportunities. These are particularly available to part-time workers and I understand that the Government are very keen to
Viscount Thurso: My Lords, perhaps I may begin by congratulating noble Lords on the brevity and lucidity with which they have contributed to the debate. The Minister and I are sharing in the proceedings on the legislation both before and after the debate and we may yet be able to snatch a sandwich. We are indeed grateful.
I declare my interests in the hospitality and tourism industry. I am patron of the HCIMA, as well as being a fellow. I am also the patron of the Academy of Food and Wine Service, and I have served on committees with the British Hospitality Association. I know that the noble Lord, Lord Cadman, received some briefing from the association because it kindly sent me a copy. In addition, I am of course working in the industry.
I thank the noble Lord, Lord Cadman, for bringing forward this short debate. He has cast a rather wide net because he threw in the minimum wage, the employment Bill that we are currently discussing, together with various other things. He has chosen a very interesting word in the title of the Question which refers to the "well-being" of the tourist industry. It does not refer to the profitability, the cost, or anything else; it concentrates on the well-being of the industry. Indeed, we could have a short debate discussing what he actually means by that.
Perhaps I may correct the noble Lord on one small piece of history, as I understand it. Perhaps the Minister will be able to confirm this. The noble Lord stated that the previous government had negotiated an opt-out. So far as I am aware, that is not the case. There was an EU directive concerning health and safety which the previous administration refused to accept. The European Court of Justice ruled that the previous government were not correct, and the directive was sent back to this country to be implemented. Therefore, so far as I understand it, in implementing the Working Time Directive the current Government are merely doing something that the previous government would have been obliged to do had they not lost office.
It seems to me that there are two broad matters to consider--the principles and the practicalities. Perhaps I may, first, briefly address the principles. Essentially, as I understand the argument, if you cannot operate without making people work more than 48 hours a week or paying them less than £3.60 an hour, your business will not work. I have fought my entire management life in the tourist industry on the basis that we should have quality employees and that those employees should have a right to decent working conditions and a decent wage.
Over many years, we have demonstrated in our industry that we are not in a position to deliver that collectively. I have always believed that the reason for that is that the fragmented nature of our industry makes it impossible for the workforce to organise in a collective manner in such a way as to enable it to obtain a reasonable wage; and that has rebounded on us. As the noble Lord, Lord Haskel, pointed out, we have a reputation for poor pay and poor conditions, which is thoroughly undeserved today. In our industry these days we offer pay and conditions that are equal to those in many other industries. Therefore, whenever I can, I shout loud to try to persuade people to go into our industry. I certainly say to them that they will be as well paid and as well looked after as in any other industry. I reject the idea that the only way in which our industry can survive is by offering poor pay and conditions.
However, having said that, there are clearly difficulties when it comes to the practicalities. As the noble Earl, Lord Stair, said, it is a question of attention to detail. As I wish to be even-handed, I shall give two examples. First, I refer to my own business, Champneys, where I rushed to implement the Working Time Directive as soon as I possibly could, having already implemented the minimum wage two years before it became law. We carried out an audit and to my horror I discovered that my chefs were being paid for a certain number of hours but were working a great deal more. Apparently someone had decided that that was the only way to implement the measure. Therefore, although I thought I was a good employer who was doing everything properly, I was in practice not doing everything right. It is interesting to note that in putting the situation right we discovered that, with a little organisation, we could implement the measure with the same number of people. I mentioned this to the BHA when I telephoned it in order to obtain its brief on the matter. The gentleman I spoke to told me that I was not alone as regards my experience. He told me that there is an extremely well known London five star hotel where the head chef told the general manager that if the measure was implemented in law he would need five more chefs in the kitchen. As one can imagine, the general manager decided to consider the matter further. By applying some sensible process engineering, it was discovered not only that there was not the need for five extra chefs but that the number could be reduced by two. Therefore, in that instance, the Working Time Directive cut employment.
I come here this evening after speaking at the Institute of Management Services of which I am also patron. We launched today an index for measuring productivity in the service sector. There is an interesting lesson to be
I ask the Government to consider carefully the genuine problems that exist. Bigger businesses such as mine can usually survive, but smaller businesses with fewer employees may experience difficulties, not with the principle of the legislation--that is, that people should not be made to work excessive hours-- but with its implementation. Some of the detail of the legislation has led to grave difficulties. I hope that the Government will listen sympathetically to what the industry has to say. We need to find solutions to help the industry to comply with the detail of the measure without violating its principles. I certainly support those principles strongly, as I am sure do the Government.
Lord Luke: My Lords, I thank my noble friend Lord Cadman for introducing this debate and for giving us the opportunity to discuss this important matter. I also thank him for giving us such an interesting insight into caravanning and its apparently many problems.
The tourism industry in Britain is the fifth largest in the country and accounts for some £53 billion a year, as my noble friend Lord Cadman said. It accounts for 5 per cent of our gross domestic product and 8 per cent of all consumer spending. It employs some 1¾ million people which is 7 per cent of the total workforce. In recent years it has been responsible for one in six of all new jobs. It comprises some 150,000 businesses of which the great majority are small. Yet the industry has the potential to create even more jobs, generate even more wealth and provide the means and will to rejuvenate run-down areas and resorts. Unfortunately, this potential has been seriously threatened by the raft of new regulations introduced by this Government. As my noble friend and other noble Lords have pointed out, the Working Time Directive seriously affects the well-being of the tourism industry. In the Government's strategy document Tomorrow's Tourism it is recognised that,
It is indeed serious for tourism that the Working Time Directive has been introduced. Tourism, almost above any other industry, needs a flexible labour force, as my noble friend Lord Montgomery said. Large businesses can absorb extra costs. However, they do not want to do so as the measure will cost them many millions of pounds. The measure will result in fewer jobs--as the noble Viscount, Lord Thurso said--but the larger businesses can accommodate those costs. However, as I have said before, the majority of the industry is made up of small businesses which are not in a position to afford the extra costs of bureaucracy. The fixed on-costs of compliance in terms of extra clerical work, computer systems and so on are much the same whether a business is turning over £50 million or £500,000, but the burden is correspondingly greater on smaller businesses.
The Working Time Directive is having a particular impact on the way in which businesses can manage shift patterns for employees such as night porters in hotels. The compliance costs are significant. Most often the directive concentrates on the 48 hour maximum, but the real problem lies in the rigid shift patterns and break requirements that the directive imposes. This industry often operates on a 24 hours per day basis. The Working Time Directive approaches issues from the point of view of what is needed for those who work on a production line in a factory. It ignores the reality of work practices for the majority of people in the United Kingdom working in a modern, diverse economy.
An additional problem is identified in issue 99 of the journal of the Tourism Society. The directive itself appears to be flawed. A solicitor writing in the journal points out that even though the regulations became United Kingdom law on 1st October 1998,
The Minister for Tourism said in another place on 5th May that the issue will be considered at the tourism summit. However, this will not be held for another year and the industry is suffering now. What will the Government do to change the operation of the Working Time Directive so that its impact on the tourism industry is not so damaging?
Lord McIntosh of Haringey: My Lords, the Government, too, are grateful to the noble Lord, Lord Cadman, for introducing the debate. It gives us an opportunity to say something about the progress of the Working Time Directive in general in addition to how it applies to the tourism industry.
I agree with the noble Lords, Lord Cadman and Lord Luke, about the importance of the tourism industry to our economy and to our labour force. In particular, I agree with the noble Viscount, Lord Montgomery, about the career opportunities available in the tourism industry and the proportion of jobs created within the tourism and hospitality industries in the past few years.
The noble Lord, Lord Luke, referred to the Government's Tomorrow's Tourism strategy. It was of course published by the Government earlier this year. It is a strategy developed in close collaboration with a very wide range of leading people in the tourism industry, who share responsibility for it and the views expressed in it. Tomorrow's Tourism states very clearly that the tourism industry needs a well-trained, well-motivated, well-rewarded workforce. My noble friend Lord Haskel and the noble Viscount, Lord Montgomery, have referred to the issue of training; the noble Viscount, Lord Thurso, referred to the issue of rewards; and motivation in the tourism industry was a theme which was, if not bubbling to the surface, apparent throughout the debate.
We must have that sort of workforce to contribute towards creating more satisfied customers and more profitable tourism businesses. Having said that, like other noble Lords, I rather like the phrase of the noble Lord, Lord Cadman, who referred to the "well-being" of the tourism industry. That is a proper way to look at it; it clearly shows concern not only for those who work in the tourism industry but who benefit from its services--in other words, the customers. In turn this will make Britain more attractive and competitive as an inward and domestic tourist destination. So let us all be in accord about the importance of the tourism industry.
I shall now turn to the Working Time Directive in particular. My noble friend Lord Haskel said that it is too early to say after one season. But, as the noble Viscount, Lord Thurso, reminded us, we have not yet had one season. It only came into force in October of last year and the full tourist season is yet to be completed--I nearly said endured. In saying that it was too early to say, my noble friend reminded me of the Oxford college bursar who criticised his college's investment policy on the grounds that the last 200 years had been wholly exceptional.
Perhaps I may remind your Lordships of the status of the Working Time Directive. The noble Lord, Lord Cadman, said that it was an opt-out; the noble Viscount, Lord Thurso, rightly told the House that it was not an opt-out; it is a treaty obligation and, as we know, we are two years late in implementing it. We had some difficulty in getting away with delaying it for that time. It should have been implemented by the previous Government.
Having said that, it is important that when we are talking about regulations--and I hear the noble Lord, Lord Luke, repeating the canard about 2,400 regulations, which is actually a reduction on the annual figure of the previous Government--we recognise that the issue is the quality, not the number.
Noble Lords should have paid attention to the speech of the Secretary of State for Trade and Industry, Stephen Byers, to the British Chambers of Commerce in Glasgow on 3rd June. He said that we have got things wrong with the Working Time Directive to a significant extent. We could have done better, particularly with the guidance that we gave and the explanations that we issued. We have been listening carefully to what business has had to say about the complexity of the working time regulations. We recognise what the noble Lord, Lord Cadman, said, that the worker friendliness of the regulations is not at all what it should be.
In the next few weeks we will be publishing revised and improved guidance on the regulations and we will ensure that it is in plain English. It will be in the form of what is described as "frequently asked questions". Those familiar with the Internet will know that "FAQ" is a common way of introducing people to new subjects on the Internet. That is the way we plan to approach the matter.
The noble Earl, Lord Stair, referred to the difficulty of record keeping. For the vast majority of British businesses their existing documentation and systems already meet the record-keeping requirements of the regulations. I know that tourism-related employers have expressed concern about this matter, but the majority of businesses are doing enough already. If the regulations did not make that clear, so much the worse for the regulations. The directive does not require elaborate new record keeping.
The new guidance will also clarify some of the other grey areas that have been referred to. It will answer the questions that have been asked most frequently since the regulations came into force. For example, it will include a sample assessment questionnaire for night workers, plus additional guidance on who is covered by the regulations and what is meant by "working time". It will cover the issues referred to in the debate about the definition of work and the coverage of the directive. There are particular problems with transport industries associated with tourism.
The Government's aim is that workers should not be required to work more than an average of 48 hours per week over a 17 week period. That is not every week but over a 17 week period. In many tourism industries a 17 week period of continuous work is a long period. Those who wish to work more should not be prevented from doing so. An individual worker may choose to agree to work more than a 48 hour average weekly limit. I should imagine that a seasonal worker, such as someone who runs a caravan park, might well agree to that on the basis that he will take his well-earned rest outside of the season. I am sure that happens all the time. I have a cousin whose only occupation is a fire watcher on top of a mountain in Oregon. He works virtually 24 hours a day for four months in the year; then he does not work for the rest of the year. It is a reasonable deal which would be allowed for under the Working Time Directive.
The additional guidance, which the Government will publish soon, will contain sample opt-out forms. In addition there are a number of flexibilities available where there is a "foreseeable surge of activity". The noble Lord, Lord Cadman, referred to "unforeseeable" surges but a lot of the seasonality of tourism is foreseeable. Tourism, where the pattern of activity is often seasonal, is specifically suggested in the directive as an example of this. The noble Earl, Lord Stair, appeared to think that that was not the case. In such circumstances, the reference period, where the average 48-hour limit has been complied with, can be extended to 26 weeks instead of 17 weeks. It may be extended to up to 52 weeks, as in the example of my cousin, by a collective or workforce agreement. In addition, workers' entitlements in relation to night work limits, rest periods between each working day and in-work rest breaks, all of which have been contentious, may be modified under these circumstances.
I do not think that it is widely known how far the flexibilities within the Working Time Directive can work to reduce or eliminate problems in the tourism industry. I do not think it is realised how well the Working Time Directive goes with the tourism strategy set out in Tomorrow's Tourism. Our approach to the Working Time Directive is entirely consistent with Tomorrow's Tourism. We seek to prevent the exploitation of workers without imposing unnecessary or excessive new burdens on business. That is good for all of us.
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